PROTECT YOURSELF FROM A BAD EB-5 INVESTMENT
For wealthy individuals seeking permanent residency in the United States, the EB-5 immigrant investor visa can be an appealing. However, the possibility of receiving a conditional resident card and then losing your substantial investment as well as having to leave the United States if the conditions for the visa are not met can cause devastation to the investor and his or her family. Therefore, the type of due diligence conducted by Investor Lifeguard is especially critical in connection with an EB-5 investment decision.
EB-5 investors should not assume that the EB-5 investment is safe simply because the “Regional Center” they are dealing with is approved by the U.S. Government. The approval of the U.S. Government is not an indication that the potential investment will be a good one, much less any indication of protection from loss of money or loss of the permanent resident card simply because the investment is made through an approved Regional Center. As a result, the U.S. government’s approval of the “Regional Center” should not be viewed as an endorsement of the likely success of the project.
Although the internet is a good starting point for information on the EB-5 visa, there is no filter on the internet. As a result, it is hard to distinguish independent advice from sales propaganda disguised as advice. On the internet, foreign investors can easily find both incompetent advice and professionals with conflicts of interest, as well as scam artists posing as experts. As a result, investors should only use the internet as part of their preliminary research and should not rely on it as the basis for their investment.
At Investor Lifeguard, we conduct significant due diligence on the individuals involved with promoting the EB-5. Some con artists see a great opportunity to scam people looking for EB-5 visas. There are all types of elaborate scams in which foreign investors could end up giving $500,000 or more to individuals or entities who are simply trying to steal the money. A simple way to reduce these risks is to never assume that you are dealing with people involved in a legitimate EB-5 investment simply because they wear nice suits; because they tell an impressive story; because they meet you at an impressive location; because they have lawyers on their team; or because they are referred by someone you know. As a first step, foreign investors need to make sure the people they are dealing with are actually who they say they are.
And, due diligence extends well beyond the determination of whether or not those involved are con artists. There are many attorneys and Regional Centers that are licensed and approved, but who do not always act in the best interests of the investor (either due to incompetence or due to conflicts of interest which taint their allegiance – or both).
Attorneys in the United States, for the most part, are trained in the law and not in analyzing the merits of an investment. Nevertheless, a recent trend has developed among some United States immigration lawyers that have begun accepting compensation or “referral fees” from EB-5 Regional Centers. Regardless of whether this “referral fee” is disclosed to the foreign investor, we believe it creates an unacceptable conflict of interest. Therefore, EB-5 visa investors should not work with an immigration attorney in selecting the Regional Center unless the attorney represents to the investor in writing that no financial benefit will be received from the EB-5 Regional Center.
Regardless of whether the investor is devoting $1 million or the lesser $500,000 in a “targeted employment area” (TEA) with high unemployment, it is crucial to vet these investments not only for legitimacy and legality, but also for viability and likely return on investment.
In connection with this investment analysis, we want to emphasize again that approval of a Regional Center by the U.S. Citizenship and Immigration Services does not signify that the Center has good projects in which to invest. In fact, many Regional Centers ultimately fail to provide permanent green cards to their investors. As a result, investors should hire Investor Lifeguard to conduct due diligence when looking for a Regional Center that will give them a chance to become a United States permanent resident, create jobs to satisfy USCIS requirements, and receive back their investment and/or a return on their investment. It is important to keep in mind at all times that the end game is not just obtaining approval of a conditional resident card, but the removal of the conditions without further requirements so that the foreign investor is provided the opportunity to live in the United States permanently.
Investor Lifeguard is not affiliated with any EB-5 project, any Regional Center, or any other advisor or seller or EB-5 investments. As a result, Investor Lifeguard has no conflicts of interest and is focused on the singular goal of protecting its clients with respect to their selection of the EB-5 project that gives them the best chance of return of investment, return on investment, and permanent residency. This is too big of a decision to leave to the internet or a professional who has conflicting allegiances.